The retail sector has faced major bankruptcy filings over the last year, led by huge retailers, including Rite Aid, Joann, Party City, and Forever 21.
Retailers blamed economic challenges they have faced since the Covid-19 pandemic for their financial distress, including rising costs of labor and products, driven by inflation and increased interest rates on debt obligations, as well as retail theft.
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Rite Aid filed for Chapter 11 bankruptcy for the first time on Oct. 15, 2023, and closed about 800 of its 2,100 stores as part of a reorganization plan.
Related: Another popular movie theater chain files Chapter 11 bankruptcy
The drugstore chain filed for Chapter 11 protection a second time on May 5, 2025, and has begun closing hundreds of its remaining stores.
Party supply retailer Party City filed for Chapter 11 bankruptcy on Dec. 21 at U.S. Bankruptcy Court for the Southern District of Texas, seeking to close about 700 of its stores. The filing was Party City’s second in two years.
Teen apparel retailer Forever 21 in March 2025 filed for bankruptcy with plans to close down over 350 of its U.S. stores.
The retailer filed for bankruptcy for the first time in 2019 and closed 100s of stores.
Retail chain bankruptcies impact suppliers
All of these retailers had a major impact on their suppliers when they closed their doors, as the suppliers often could not easily replace the income generated from those huge customers.
Certain retail suppliers were devastated by their customers’ bankruptcies and store closings, which resulted in the suppliers filing for bankruptcy as well.
IG Design Group files for bankruptcy protection
Major crafts and hobby products supplier IG Design Group Americas Inc. filed for Chapter 11 bankruptcy, seeking going-concern sales of its business divisions and a wind-down of its operations after its largest customer, Joann, filed for bankruptcy liquidation and closed 815 stores.
Related: Popular pizza dining chain files for Chapter 11 bankruptcy again
The Berwick, Pa.-based debtor and 21 affiliates filed their petition in the U.S. Bankruptcy Court for the Southern District of Texas on July 3, listing $100 million to $500 million in assets, over $25 million in secured debt and over $105 million in unsecured debt, according to a declaration from Chief Strategy Officer Brett M. Anderson of Huron Consulting Services.
IG Design Group’s largest unsecured creditors include Hatfield & Associates, owed over $1.8 million in trade debt; Hong Kong Rui Sheng Yuan Ltd., owed over $1.5 million in trade debt; and Star Moon Toys (HR) company Ltd, owed over $767,000 in trade debt.
The debtor is seeking $53 million in debtor-in-possession financing from prepetition lenders to finance its bankruptcy case, consisting of $38 million in new money and a $15 million roll-up of prepetition debt.
The debtor faced a 16% revenue decline in 2024 to $500.3 million compared to $593 million in 2023.
The debtor’s top customer, Joann, had filed for Chapter 11 bankruptcy the first time on March 18, 2024, seeking to reorganize its business, reduce debt, and seek new financing.
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The fabric and crafts retailer’s business deteriorated further, and it filed for Chapter 11 reorganization on Jan. 15, 2025. In February, Joann decided that the liquidation of all of its stores was its best option.
Joann’s decision to shut down all operations severely impacted IG Design Group’s business, making it difficult for the company to maintain historical operating results and adapt to market conditions despite turnaround initiatives.
IG Design Group also faced challenges due to the Trump Administration’s tariffs imposed on imported goods, as the debtor imported a large amount of products from international sources.
In May 2025, IG Design Group sold its assets to a Hilco Capital Ltd. affiliate, which planned to sell company assets as a going concern and liquidate certain other assets.
IG Design Group is seeking a going-concern sale of its crafting and hobby business units through its sale strategy, which includes its sewing, gift, stationery, play, and ribbon assets, and a wind-down of its business.
The debtor considered an out-of-court process, but determined it would be insufficient to wind down its business.
Related: Major iconic food brand files for Chapter 11 bankruptcy
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